AP MicroeconomicsMicroeconomic Theory
Marginal Rate of Substitution
The marginal rate of substitution is the rate at which a consumer will give up one good to get more of another while staying equally satisfied.
It equals the slope of the indifference curve and diminishes as you move along it — the more you have of a good, the less of the other you'll sacrifice for it. At the optimal bundle, the MRS equals the ratio of the goods' prices.